The Benefits and Costs of the Tarp Bailouts: A Critical Assessment

The Benefits and Costs of the TARP Bailouts: A Critical Assessment, Quarterly Journal of Finance 8 (June 2018), Forthcoming

32 Pages Posted: 1 May 2018

See all articles by Allen N. Berger

Allen N. Berger

University of South Carolina - Darla Moore School of Business; Wharton Financial Institutions Center; European Banking Center

Date Written: April 14, 2018

Abstract

We assess benefits and costs of the Troubled Asset Relief Program (TARP) based on theory, data, and empirical research to date. TARP was intended to attenuate systemic risk and improve the real economy, and we focus on these as the most important potential effects of the program. Evidence suggests mostly short-term social benefits in reducing systemic risk and improving the real economy. However, long-term evidence is limited – suggesting relatively long-lasting real economic improvements that might be offset by long-term increases in systemic risk. We give TARP a grade of “incomplete,” pending further research, and suggest some directions for this research.

Keywords: TARP, Banks, Bailouts, Financial Crises

Suggested Citation

Berger, Allen N., The Benefits and Costs of the Tarp Bailouts: A Critical Assessment (April 14, 2018). The Benefits and Costs of the TARP Bailouts: A Critical Assessment, Quarterly Journal of Finance 8 (June 2018), Forthcoming. Available at SSRN: https://ssrn.com/abstract=3162628

Allen N. Berger (Contact Author)

University of South Carolina - Darla Moore School of Business ( email )

1705 College St
Francis M. Hipp Building
Columbia, SC 29208
United States
803-576-8440 (Phone)
803-777-6876 (Fax)

Wharton Financial Institutions Center

Philadelphia, PA 19104-6367
United States

European Banking Center

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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